Fraud affecting the EU budget increased slightly in 2012 compared to 2011, according to the Commission's annual report on the "Protection of the EU's Financial Interests". On the expenditure side, in total, €315 million in EU funds were affected by fraud, or 0.25% of the expenditure budget. This compares to €295 million the previous year. The reason for this increase lies almost entirely with two cases of fraud in pre-accession funds, involving large sums. On the revenue side of the budget, suspected or confirmed fraud amounted to €77.6 million, representing 0.42% of the total traditional own resources collected for 2012. This compares to €109 million the previous year.

The Commission undertook a number of significant initiatives in 2012 to intensify the fight against fraud. In addition to the implementation of the new anti-fraud strategy (IP/13/530), there was significant legislative progress over the last year, including:

the proposal to set up a European Public Prosecutors' Office (IP/13/709). This new institution will significantly strengthen the investigation and prosecution of criminal practices affecting the EU budget.

the new OLAF Regulation, which will create a stronger EU anti-fraud office (MEMO/13/651);

a Communication on how to further improve the governance of OLAF, building on the agreed reform of the Office and taking into account the EPPO proposal (IP/13/709)

the proposal on the protection of the financial interests of the EU by criminal law (IP/12/767). By harmonising definitions of crimes against the budget, and introducing minimum sanctions to be applied to these crimes, this could also considerably help to protect funds and deter fraudsters across the Union;

Today's report also looks at the measures taken by Member States in 2012 to protect and defend the EU budget, and acknowledges good work in some areas. Nonetheless, the Commission underlines the need to further harmonise and strengthen Member States' approaches, to ensure that fraud is fought equivalently across the EU. A number of recommendations are made to Member States to improve fraud prevention and detection.

Algirdas Šemeta, Commissioner for Taxation, Customs, Statistics, Audit and Anti-Fraud, said: “The Commission is bringing the fight against EU fraud to a new level. Proposals we have tabled in the past year – not least that for a European Public Prosecutor's Office – can deliver a serious blow to fraudsters across Europe. Now Member States, too, need to show their commitment to fighting fraud to the EU budget. I urge them to step up their game at home and support the new measures at EU level. Every cent clawed back from fraudsters is money that can be spent for the public good."

Background

As required by Article 325 of the TFEU, the Commission produces the Annual Report on the Protection of the EU’s Financial Interests to report on measures taken to counter fraud affecting EU funds. By detailing the level of suspected and confirmed fraud reported by the Member States across the entire EU budget (i.e. both revenue and expenditure), the report also helps to assess which areas are most at risk, to help with targeting action at both EU and national level.

In addition to data on reported fraud and irregularities, recoveries and financial corrections and reporting levels in the Member States, the Commission and Member States also choose an area for in-depth analysis each year. This year, that area is agriculture. It notes improvements in financial control and risk management systems (e.g. legal provisions and guidelines, administrative procedures and cooperation between national authorities) in this area. However, the Member States' replies confirm a weakness already highlighted in the past, Member States need to improve the monitoring of results of administrative and criminal investigations.